Tag: Unemployment

A few days ago, the National Federation of Independent Business (NFIB) released their monthly Small Business Optimism Survey, and it ain’t pretty. Not only has optimism among small business owners taken a nose dive, but growth-building activities such as hiring, making capital outlays, and increasing inventory have seemingly slowed down across the board.

For the past few months the NFIB has reported a modest increase in optimism and with it a slow, but positive increase in growth-building activities. So the obvious question over here is: why is this happening, and perhaps more importantly, why now?

It is interesting to note that looking back at the results of the NFIB survey a year ago, some of the key statistics seem to have hardly changed. Namely, the most important business problem cited by survey respondents in June 2011 was poor sales (24%), followed by taxes (20%). This year, the numbers are 23% and 21% respectively. The only significant change was in the third option: government requirements and red tape, which jumped from 15% a year ago to 19%.

Given that most legislative changes on a federal and state level were initiated at the beginning of the year, again the question remains, why the sudden turn about now?

Aside from all the legislative talk that is going on (and has been going on for some time now) regarding health care, taxes, and credit card reform, perhaps this negative attitude can simply be pinned to the fact that many small business owners find themselves battle weary and stuck in a rut. Right now we are in the height of the summer season. It’s a time when the majority of businesses should either experience a typical, seasonal slowdown in sales, or, if they are a seasonal business, they are in the middle of their peak revenue days. We’re also holding in the middle of the year, the furthest point from New Years, when people tend to have a more hopeful and positive outlook.

If sales have not been good and now sales are even slower for seasonal reasons, or if the potentially lucrative summer season is fizzling (all of which are possible given that unemployment has remained stubbornly high while job creation continues to lag), the concerns weighing on a small business owner’s mind can easily become magnified. Taxes and government regulations become more of a problem when there is less money and resources to tax and regulate. Moreover, attitude can significantly dictate the actions being taken.

So, are the NFIB’s survey results really a cry from recession weary small business owners, or are they reacting to other factors? Only time will tell.

When it comes to the U.S. economy, sometimes it seems that everyone loves a good scapegoat- especially when the “everyone” is desperately trying to turn a blind eye to some ugly, fundamental problems…

As economic analysts try to make sense out of Wall Street’s recent nose dive, there are so far several suspects in the line up: the recent credit downgrade, the uncertainty over the national debt and any legislation or changes in government spending connected to it, the growing debt crisis in Europe, and a series of rather weak economic indicators in the US, including the current GDP.

The most recent survey of Small Business Optimism conducted by the National Federation of Independent Business (NFIB) suggests deeper, more fundamental issues are at work here. What is particularly telling is the significant (and seemingly widening) divide between Big Corporate America and Main Street America. Here are some of the highlights of the survey:

Though the national labor reports released at the end of last week indicate that the unemployment rate has dipped ever so slightly, it seems that the same is not true among small businesses in particular: “Twelve percent (seasonally adjusted) reported unfilled job openings, down 3 points. Over the next three months, 10 percent plan to increase employment (down 1 point), and 11 percent plan to reduce their workforce (up 4 points), yielding a seasonally adjusted 2 percent of owners planning to create new jobs, 1 point lower than June, leaving the prospect for job creation bleak.”

According to the survey, revenues among small businesses have continued their sluggish trend: “The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past 3 months lost 1 percentage point, falling to a net negative 8 percent. Currently, there are more firms with sales trending down than there are with sales trending up…”

Likewise, the majority of small businesses report stagnant or diminishing sales: “Reports of positive earnings trends were unchanged at a net negative 24 percent of all owners… Corporate profits are at a record high level as a share of GDP, but these increased have not translated to Main Street, where even among the most optimistic of sectors, small manufacturing firms, only 23 percent reported higher earnings while 37 percent reported lower profits (not seasonally adjusted).”

Investment in growth, expansion, including standard equipment and facility upgrades remains weak even among many financial incentives: “The frequency of reported capital outlays over the past six months was unchanged at 50 percent of all firms, [and] the percent of owners planning capital outlays in the next three to six months fell 1 point to 20 percent, a recession level reading that has typified the recovery to date…”

With all of the above factors, it’s not surprising that optimism among small companies is not so high: “The net percent of owners expecting better business conditions in six months was a negative 15 percent, down 4 points and 25 percentage points lower than January.”

With unemployment still lingering at all-time high’s and consumer confidence still languishing, how are so many big corporations pulling in such record profits? The answer is that many of these businesses are cutting costs by letting go of “expensive” domestic workers, closing down stores and factories, and actively seeking cheaper, foreign labor as well as expanding operations in emerging foreign markets. Of course these tactics seem to be fueled by a desire among corporation owners and top management to keep their coffers full and make Wall Street happy

None of this helps the American economy much, and in fact it can be a big reason why the nascent “recovery” seems to have so quickly sputtered and stalled. Less people employed = less people to buy goods and services. Period. We can expect difficult times ahead until Big Corporations and Small Businesses are pretty much going in the same direction. As of yet, that gap is getting harder and harder to bridge.

American poet Nathaniel Parker Willis once opined that June is a “month of leaves and roses, when pleasant sights salute the eyes and pleasant scents the noses.” But those who have been following the recent economic reports that have come out this month, or who are experiencing them first hand, may not be feeling so “pleasant” nor poetically inspired.

The first piece of not-so-cheery news was the Bureau of Labor Statistics’ employment report which recorded an increase of a mere 54,000 jobs in May (a number that scored well below many initial economic forecasts) and an unemployment rate that stubbornly held at 9.1 percent.

On to the National Federation of Independent Business (NFIB’s) Small Business Optimism Index in which it was reported that aside from the slowdown in hiring, plans to purchase equipment, supplies, and/or inventory have “all weakened and remain at recession levels.” Many business owners have been raising their prices as inflation and poor sales remain top business concerns as well as uncertainty surrounding major legislative initiatives, such as health care, taxes, and credit reform. Needless to say, these days optimism has become a rare commodity among small business owners.

And finally, it was reported that the aptly named “Misery Index,” which is a calculation based on the sum of unemployment and inflation rates, reached a 28-year high last month. There are those who argue that the numbers are skewed and that we are actually holding a record highs.

All of this has been raising concerns that our fragile recovery (if we can even call it that) will dip back into a recession. Whether or not that happens still remains to be seen, but nonetheless, it seems that the economic storm clouds will be slow in passing. Keep your umbrellas handy.

As the unemployment rate continues to hover around 9.5%, leaving consumer income depleted, many industries have been suffering. But not every industry has been hit hard by the recession. The truth is that for numerous companies business is booming as a direct result of the high unemployment rate.

What are these industries, and why are they flourishing? Here’s a rundown:

1. Healthcare. Stressed-out people with no money or insurance to take care of themselves are prone to illness. Regardless of financial status, they still need healthcare.

2. Marriage and Family Counseling. Job loss and financial insecurity create wellsprings of conflict. Unhappy folk are turning to therapists to help them deal with the changes in their lives.

3. Career Counseling. Many who have suddenly lost their jobs or who are just entering the job search pool are being forced to reconsider their career paths. Career counselors provide aptitude testing and advice.

5. Online Content Sites. Penny pinchers are thrilled to pick up free information, especially when it helps them save valauable time and money.

6. Debt Management Companies. People who are steeped in debt are turning to financial consultants and debt management companies to help them get their obligations under control and establish responsible spending habits.

12. “Sin” Vendors. Vendors of alcohol, cigarettes, and candy, as well as gambling venues, offer a quick and affordable mood boost to people who are down in the dumps about the economy. Gambling also presents a chance to make some quick money.